Internal Rivalry
Entry
Substitutes and Complements
Supplier Power
Buyer Power

And their impact on the profitability and welfare of different stakeholders in the market. In the big bad world of inflation, “Cheap Cheap” and “Everyday lower prices” have been the only words of solace. For the past 3 generations, Australians have relied on the consistent comfort of competitively low prices at supermarkets. It is no wonder then, that the supermarket industry has caught the eye of everyone in the spectrum – economists, global retailers (like ALDI, Lidl, Walmart, etc.) and (inspections by) the regulators alike.
Even though the market life cycle is developed, the outlook for the market looks positive, propelled by external factors population growth (1.6% YoY in 2014) and rise in average weekly earnings1. But the long-run duopoly in the market is witnessing a change in landscape with international competitors (like Aldi) swelling their market share in the subcontinent. This makes the supermarket industry in Australia interesting to analyse under Porter’s 5 Force
Model Analysis.
Defining the Market
This analysis set geographic boundaries for the supermarket or grocery retail industry over the Australian subcontinent. Given their large population size and concentrated pockets of inhabitancy, supermarkets are generally populous in the states of Victoria, NSW and
Queensland.
A common misconception is related to the product offered. The product offering is not the merchandise but the services that enable buyers to purchase merchandise.2 Given that the merchandise are groceries and staples (normal, necessary goods), the demand for these is fairly inelastic and disseminated over individual…...

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Rain pouring, the cars wipe away their tears as they pull up into the parking spaces. People hurry into the supermarket with their hoodies up or carry something over their head to avoid getting wet. The supermarkets brightly lit, Christmas decorations were dotted everywhere. A big tree nicely decorated was lit on the far side of the supermarket with lots of lovely presents neatly placed underneath.
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Inside the supermarket the scent of bread and fruit filled the air. All the while customers pushed and shoved as they tried to squeeze past one another trying to gain access to the many bargains and free bread being given out. The supermarket was as busy as a hive full of bees rushing to make honeycomb for their queen. Shelves that had been neatly stacked just a few hours ago were now all over the place. Fruit was squashed, milk was spilt. Clothes were out of place, jewellery was on the floor – miss-matched, shoes were with wrong pairs and hangers were chucked here and there.
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For at least 40,000 years[14] before European settlement in the late 18th century, Australia was inhabited by indigenous Australians,[15] who belonged to one or more of roughly 250 language groups.[16][17] After discovery by Dutch explorers in 1606, Australia's eastern half was claimed by Great Britain in 1770 and settled through penal transportation to the colony of New South Wales from 26 January 1788. The population grew steadily in subsequent decades; the continent was explored and an additional five self-governing Crown Colonies were established.
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